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STATE OFFICIALS AGREE, PEG REVENUE GROWTH BELOW 4 PERCENT
By Jim O'Sullivan
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, JAN. 8, 2008….State tax revenues will grow below 4 percent next fiscal year, to $20.987 billion, Patrick administration officials and lawmakers agreed Tuesday, but the pending deficit is deep enough that next year's budget should include casino licensing fees, said the top Senate budget author.
Sen. Steven Panagiotakos said he hopes that Gov. Deval Patrick includes casino licensing fees, which could result in $800 million, in the blueprint he must file by Jan. 23. House leaders have warned Patrick not to include those in his bottom line since the issue of legalizing casinos is still up in the air.
"My feeling is that anything that can move the debate I'm in favor of, and I think that will help move the debate," said Panagiotakos (D-Lowell), intensifying his support for casino revenue use.
A spokesman for Panagiotakos said it was too soon to speculate whether the casino licenses would be a factor in the Senate budget plan.
The $20.987 billion estimate matches one that Patrick's budget chief, Leslie Kirwan, released in October. On Tuesday, Kirwan, Panagiotakos, and House Ways and Means chair Robert DeLeo, announced in a joint statement that they had settled on the figure, which represents a 3.8 percent growth clip.
Budget writers have predicted a structural deficit next year well north of $1 billion, much of the gap created by spending pressures that are outpacing revenue growth.
The off-budget commitment for the MBTA would hit $768 million, a $12 million increase over the set-aside for the current fiscal year. The School Building Assistance account would receive $702 million, nearly $70 million over this year. Pension transfers are marked for $1.465 billion, a $66 million increase but with no changes to funding schedules. That would leave the amount of tax revenue available for the fiscal 2009 budget at $18.052 billion.
The forecast is crucial to budget-writing, and was hashed out after top state officials interviewed experts, and conducted their own negotiations. Revenue estimates in the last several years have hung well below actual revenues, allowing surpluses that can be used for mid-year spending initiatives and for the coverage of non-recurring revenues and unexpected spending.
Last January, administration and legislative leaders agreed tax intake would climb roughly 3 percent in the current fiscal year, for a consensus revenue estimate of $19.879 billion. The Department of Revenue reported last week, halfway through fiscal 2008, that tax collections were 4.2 percent ahead of the first half of last fiscal year, $422 million above the original FY '08 benchmark, which was revised upward by $400 million in October.
Whether the state should beef up its available revenues has shaped up as the most important question on the Hill. Patrick is insistent that it should, with less-vocal backing from Senate President Therese Murray, but House Speaker Salvatore DiMasi's opposition has so far been fixed.
Panagiotakos said the state is likely facing a $240 million hole in Lottery aid from the current and last fiscal years, that will need to be filled from the general operating account and is likely to recur, along with health care costs running $150 million higher than estimated. As a result, he said, the state would likely have to pull down reserves to balance its budget or use unexpected tax revenues from this fiscal year to balance the budget.
That predicament, he said, argues for bolstering revenue intake.
The House, which will receive Patrick's House 1 budget later this month before making changes and passing it on to the Senate, is poised to reject gambling revenues.
DiMasi spokesman David Guarino, "We'd prefer if the governor used revenues … that he knows are available, rather than ones he hopes are available."
WITH JOBS ON THE LINE, PATRICK'S UNEARMARKED CAPITAL GRANTS HEADED FOR SPLICING
By Jim O'Sullivan
STATE HOUSE NEWS SERVICE
STATE HOUSE, BOSTON, JAN. 8, 2008….Lawmakers plan to dice a block of $75 million for job-creating infrastructure improvements into specified projects, again challenging Gov. Deval Patrick's efforts to reserve allocation of state grant money as an executive privilege.
The $75 million, which Patrick proposed in a $2.5 billion borrowing plan he filed last week, would replenish a state program that administers grants for capital improvements in exchange for promises of new, permanent jobs. Patrick and legislators clashed over the grant awards this year, with locally elected officials arguing that he had neglected worthy projects and the administration calling for competition among grant applicants.
While the proposal is far from the top of the Legislature's agenda this year, legislators in both parties and both chambers said they expect the money will be assigned before they send the measure back to Patrick for his signature.
Senate Ways and Means chair Steven Panagiotakos (D-Lowell) said, "I would think that may be the case with a lot of the bond bills, not just that one. It's the one opportunity for the legislators to put forth their priorities."
Asked Monday about the $75 million proposal, Patrick said, "I think that the best use of that fund is without earmarks and as a competitive grant program. I've been clear about that and we'll just see how it works its way forward."
Last year, the Massachusetts Opportunity Relocation and Expansion (MORE) Jobs Program shelled out $77.9 million for 22 projects that state officials said are expected to lead to over 8,000 jobs. That left 15 rejected applicants, accounting for about $183 million. According to a report the Executive Office of Housing and Economic Development filed last week, 18 other municipalities are looking to apply.
Rep. Marty Walz, a Boston Democrat who has been critical of $10 million authorized through the MORE fund for the controversial Columbus Center development in Boston, said she thought the earmarking battles of last year, which extended to the operating budget and other economic stimulus programs, would incite lawmakers to write their own earmarks into the program.
"When I read about the governor's request for an [unearmarked] $75 million for the MORE program, it reminded me of an old expression about second marriages being the triumph of hope over experience, and I expect the Legislature will give close scrutiny to the governor's request in light of our past experience," she said.
House Minority Leader Bradley Jones said he thought lawmakers would react to Patrick's proposal with an attitude of "Well, governor, if we give you this money we're going to either want some very hard and fast assurances about your evaluation criteria or, heck, we're just going to earmark it."
An administration official familiar with the MORE fund but speaking anonymously said that, because of bonded spending limitations placed on the program, none of the $75 million could be paid out until 2010. Earmarking for specific programs, the official said, would be "premature."
Instead of writing in specific earmarks, Jones said lawmakers might opt to add qualifying language to the MORE criteria that would limit the administration's flexibility in distributing funds. At Columbus Center, state aid is delayed while developers attempt to resolve private financing and the matter of ownership of a deck spanning the Mass. Turnpike between the South End and Back Bay neighborhoods.
"There is additional information necessary in the secondary application process that was not included in the preliminary application process, and those terms have not yet been met by the applicant," said EOHED spokeswoman Kofi Jones. She said, "We don't have complete information on funding sources, and we need to ensure that the infrastructure that the MORE dollars would go to would be publicly owned."
The Columbus Center grant last year touched off a spat between Gov. Deval Patrick and House Speaker Salvatore DiMasi, who has been long critical of use of public funds for the project, which includes 450 condominiums and a luxury hotel. About 45 of the condo units will be priced affordably, and the development includes public parks and retail space.
DiMasi was angered when he learned the state had committed $10 million to Columbus Center and was considering doubling that assistance. The North End Democrat sent Patrick a tart letter using the case as an argument against Patrick's earmarking reform efforts, which echoed with members of the Legislature who view earmarks as their opportunities to assert local priorities.
"I would say that earmarks for the most part are something that is necessary for legislators to be able to advance their priorities in the process," Panagiotakos said. "When you get rid of earmarks totally, or the potential for earmarks, in many ways you have made a legislator irrelevant when it comes to that particular program."
The bond bill Patrick filed last week was Patrick's final in a series of proposals that equal roughly $10.5 billion in borrowing and $14.5 billion in spending, with the difference coming through federal assistance. Administration aides say all of the bills fit into a five- year capital plan and meet the requirements of a debt affordability analysis.
DiMasi spokesman David Guarino said he didn't think there was a timeline for the Legislature to act on Patrick's latest bonding proposal.
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